Oil Companies Roasted

The CEO’s of the major oil companies are being grilled in Washington by a variety of lawmakers intent on attacking what they see as ‘excess’ profits. The gist of their accusation is that the companies have reaped excess profits and are either passing it back to shareholders or hoarding cash, rather than investing in new production. There is talk too of an ‘excess profits’ tax, which would yield about $25 billion in 2005. Now I know we need every penny we can get so Geaorge and the Republicans can pass more tax cuts for the wealthy, but I happen to think an excess profits tax is wrong.

The problem is that consumers are still wedded to oil, which having a special tax to pass on to consumers as a rebate or tax credit does nothing to solve. In fact it makes it worse because it sends the message that the government is committed to protecting, rather than replacing, our oil dependence. Making a fuss over ‘excess’ profits is great theater, but it masks the continuing dearth of hard headed policy making in Washington. This administration [and in this case the Democrats are no better] has absolutely no energy policy that credibly gets America off its oil habit. Just for the record America is the least efficient energy user of all the large industrialized countries: it takes a lot more energy here to produce a dollar of wealth than it does elsewhere. Why? Because energy is ridiculously cheap, so no one has an invcentive to conserve. This summer’s spike in oil costs had practically no lasting effect on consumption, which tells me that consumers are so hooked on oil that they are willing to pay a lot more still if need be. Sounds like a great time to keeep those costs high via an energy tax and drive the country towards conservation and alternative fuels. That’s politically hard to do. That’s leadership. Carping on about so-called excess profits is a just granstanding. It’s a weak cop-out.